A product goes through many phases in its lifetime. After a design phase, a product is typically manufactured and prepared for distribution. The product may be shipped directly to a customer or it may be shipped to a reseller for sale to other resellers or customers. In the past, once a product left a manufacturing site, the product producer (hereinafter “vendor”) had little if any information as to where the product was, to whom the product was sold, what the product was being used for, or the condition of the product. Vendors tried to determine some information about to whom the product was finally sold (hereinafter the “customer”) by providing a warranty or registration card and requesting that the customer fill out the card and return it to the vendor. Many customers would simply fail to return the card or not provide the information requested (or would provide inaccurate information by mistake or otherwise). This left a gap in a vendor's knowledge regarding where the product ended up. In addition, if the customer failed to fill in the serial number of the product (or filled in an incorrect serial number), the vendor did not know which specific product the customer received.
Vendors provided incentives for returning completed cards such as a drawing for a free product or otherwise. This motivated some customers to return cards but still did not guarantee the correct entry of data regarding the product received. In addition, the card was typically the last communication received from the customer (unless something went wrong with the product). In general, the vendor did not know how the product was performing, whether it had errors, or otherwise.
With the Internet age and electronic and software products, some vendors provided electronic means for returning registration information. Although somewhat better than the paper cards returned, these means suffered many of the same problems—failure to register, incorrect information supplied, and lack of status updates regarding the product. In addition, electronic registration was susceptible to interception and information gathering by hackers and competitors of the vendor.
Furthermore, vendors who received registrations—electronic or otherwise—had no way of monitoring that a product was used as licensed. For example, a customer could buy a hardware/software combination in which the software was licensed to run on the shipped hardware only. The hardware could be a computing device of limited computing power and resources. The customer could install the software on a more powerful platform and register the software using the better platform. A vendor could not tell that the software was running on an unlicensed platform and had difficulty enforcing the license agreement in an automated way.